Gold Review: Seems vulnerable ahead of the FOMC announcement

   •  Surging US bond yields triggers the latest leg of a downtick.
   •  Subdued USD price action helps limit deeper losses, for now.
   •  Technically seems poised to extend the bearish trajectory.

Gold traded with a negative bias through the early North-American session and is currently placed at the lower end of its daily trading range. 

A strong upsurge in the US Treasury bond yields, with the benchmark 10-year yield climbing to the 3.0% psychologically important level was seen as one of the key factors weighing on the non-yielding yellow metal. 

Apart from this, a subdued US Dollar price action, which failed to gain positive traction from today's stronger than expected ADP report, did little to influence the movement, albeit seemed to help to limit deeper losses, at least for the time being.

Today's US economic docket also features the release of ISM manufacturing PMI but again is unlikely to provide any meaningful impetus ahead of the latest FOMC monetary policy decision, due to be announced later during the New-York trading session. 

Technical Analysis

Looking at the technical picture, the commodity has been oscillating within a short-term descending trend-channel formation on the 1-hourly chart. This coupled with the recent rejections from the $1235 supply zone formed a double top chart pattern and adds credence to the bearish trend. 

Hence, any meaningful up-move might continue to confront some fresh supply at higher levels and only a sustained move above the $1235 strong barrier would negate the near-term negative outlook.

Meanwhile, the downfall is likely to get extended back towards retesting YTD lows, around the $1212-11 area, with a follow-through weakness, amid prospects for gradual Fed rate hikes, remains a distinct possibility.